What is shared ownership, and how does it work?
Shared ownership is a great way to step onto the property ladder and help you own part of a property that otherwise may have been unaffordable.
Shared ownership is very similar to buying a property outright, however, with shared ownership, you will pay a portion of the deposit required and your monthly mortgage amount, both depending on the share of the property you are buying.
The government aims to get more people to buy a house rather than renting and has recently reduced the deposit amount required for the shared ownership scheme from 25% to 10%, as it feels more people will be able to join this scheme.
As your financial situation improves, you can increase your share ownership of the property until you own the entire property outright or decide to sell it in the future.
For the share of the property you don't own, you will have to pay a subsidised rental amount each month. Typically you can buy a share between 25-75% of the property, with the option to purchase more or all the property at a later stage.
In addition to the reduced deposit required to purchase a shared ownership home, the government has made it easier to buy additional shares in the property.
Before the recent announcement, increments of 5% or 10% had to be purchased. However, with the recent change, people can purchase in increments of 1% with slightly reduced fees.
The remainder of the property will be owned by a housing association, private developer or your local authority, to which reduced rental payments are made for the share that they own. Rental payments are typically set at around 3% of the remaining equity.
Through this scheme, properties that can be purchased are either new build properties, or older shared ownership properties that are being re-sold by a housing association.
At present, shared ownership properties are on a leasehold basis and attract a service charge and ground rent. However, it may mean that ground rent won't be required to be paid with the government's new proposals.
Anyone can apply for a shared ownership scheme, however, certain criteria must be met, and this can be found on the government's website.
If you are looking to buy or sell a property, speak with one of our property experts today by calling us on 0116 266 9977.
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